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Neutral Citation Number:
Reported Number: R(IS)7/98
File Number: CIS 7330 1995
Appellant:
Respondent:
Judge/Commissioner: Judge P. L. Howell Q.C.
Date Of Decision: 22/01/1997
Date Added: 26/07/2002
Main Category: Capital
Main Subcategory: Disregards: pensions, policies and similar
Secondary Category: Earnings and other income
Secondary Subcategory: Notional Income
Notes: Capital - investment bond - whether to be disregarded as the “surrender value of a policy of life insurance” In late 1993, the claimant went into a nursing home, and on 1 December 1993 claimed income support through her appointee. On 23 December 1983, she had invested £10,000 in an “investment bond” with a life assurance office. The surrender value of the bond was linked to the performance of an investment fund and could be realised at any time. There was an option to obtain monthly payments by partial surrender which the claimant exercised. A guaranteed minimum death benefit was payable insofar as the bond was not cashed before the claimant died, but this was substantially below the cash value obtainable during the claimant’s lifetime. A tribunal decided that the outstanding cash value of the bond should be taken into account as capital for income support. The claimant appealed. Held that: 1. the cash value of the bond fell to be disregarded as capital under paragraph 15 of Schedule 10 to the Income Support (General) Regulations 1987, as the “surrender value of a policy of life insurance”. It was sufficient that the bond contained provisions for payment on contingencies dependent on human life, even if those provisions were peripheral to the main purpose of the bond: CIS/122/1991 and Gould v. Curtis [1913] 3 KB 84 applied (paras. 10, 11, 12(1) and (2)); 2. where a significant amount is invested in such a bond, so that its value falls to be disregarded as actual capital, this operates as a “deprivation” and an adjudication officer should always consider whether the investment was made for the purpose of securing entitlement to income support then or later. There is no “safe period” for the purposes of regulation 51(1) of the Income Support (General) Regulations 1987 (para. 12(3)).
Decision(s) to Download: Is07_98.doc Is07_98.doc